Landlords in the UK have launched a judicial review of the Governments planned buy-to-let reforms as the property world steps up its opposition to the unfair proposed new tax rules. The application was submitted as required by landlords Bolton and Cooper, they hope to overturn clause 24 in the financial act 2015. The proposed changes could come into effect from April 2017 and charge buy-to-let investors tax on their mortgage interest payments. This would go against the fundamental business principle that income less expenses or costs equals net profit. The group believes that there may be a basis in human rights and European law where clause 24 can be overturned. The law firm supporting there challenge is headed by Cherie Blair CBE QC the wife of former labour Prime Minister Tony Blair. Last weekend the group received a response from HMRC to their pre-action protocol letter which was submitted as required last month. The group have been told they have a strong chance of winning the action and there are 341,000 landlords watching with great anticipation. If the action was to fail then 58% of landlords have indicated rents will have to increase due to the erosion of profits. 42% of the reviewed landlords also stated that they have transferred their business into a limited company status. Testing times indeed for the buy-to-let market but it is interesting to note that the landlords we have spoken to are full of confidence for the future. One such landlord commented “in business challenges are always facing you in one way or another, we will overcome these issues”. “There will always be a market for good quality properties as a great many people simply cannot afford to buy their own homes”. “Property values in the UK continue to increase year on year and this aspect alone will give the landlord an overall profit”.
